In a fillip to manufacturing, corporate tax rate slashed for domestic firms

Marco Green
September 20, 2019

"Ordinance to slash corporate tax rates for domestic companies has been cleared by Cabinet", Sitharaman said.

State-owned banks will not declare stressed small businesses as non-performing assets (NPAs) till March 31, 2020, said Finance Minister Nirmala Sitharaman on Thursday, listing more measures to lift up the economy by ensuring credit.

She said, "The total revenue foregone due to the relief provided stands at Rs 1.45 lakh crore per year". Banks would be encouraged to include new retail customers for lending, she said.

"Tax rate of 25.17 % on domestic firms".

The measures announced by the finance minister will be positive for fast moving consumer goods (FMCG) companies like GSK Consumer, Nestle, ITC and Hindustan Unilever as their current corporate tax rates stand at 35 percent, 34 percent, 32 percent and 29 percent, respectively.

To provide relief to companies availing of concessions and benefits, a MAT relief by reducing it from 18% to 15%.

"In order to promote growth and investment, a new provision has been inserted in the Income Tax Act with effect from fiscal year 2019-20", Ms Sitharaman said.

The minister also said companies opting for 22 per cent income tax slab would not have to pay minimum alternative tax (MAT). Equity benchmarks BSE Sensex and NSE Nifty rallied almost 2 per cent after Sitharaman's proposals. The markets immediately rose after the announcement, with the Sensex surging over 900 points and Nifty climbing above 10,900 mark.

Sitharaman also reviewed PSBs' performance on the various initiatives announced earlier on credit growth, rate cut transmission, and amalgamation. State finance ministers are in support of the move as a tax cut on luxury hotels is unlikely to impact overall GST receipts.

Other reports by Click Lancashire

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